One reason I don't worry myself to death (like my mother, whom my brothers have dubbed "Dr. Doom"), is because I'm a natural-born contrarian. When something seems too good to be true, I look for the negatives. When something seems overtly negative, I look for the positive side. Despite this propensity for equilibrium, I was almost overwhelmed by an article I read in the 14 November 2005 issue of Forbes Magazine. Author Daniel Lyons takes the reader on a tour through the "Attack of the Blogs," where seemingly innocent victims are helpless against online vitriol. While his article is intriguing and worth an examination, I was concerned about what appears to be a new trend in Internet warfare that might affect investors and their portfolios.

Lyons takes his readers on a journey through stories about several small- to large-sized businesses which have lost money/credibility/reputation and jobs through the onslaught of "brand-bashing, personal attacks, political extremism and smear campaigns" created by web bloggers. While I know that some Web sites spew unethical content, I had no idea that some of these operations were so effective or accomplished in their efforts to take people and entire companies down. On the other hand, I had to question Lyons' suggestions to business owners for counter measures against blog attacks, because the ideas are fraught with troubling complications for the investor.

The major core of the problem for businesses that are attacked by Web personalities is centered on the blogger's right to free speech. But Lyons is quick to point out that character defamation is wrong, and that companies who run free blog sites rarely monitor blogs for material that defames individuals. Therefore, Lyons has no qualms about nailing these free blog site companies to the wall in his accusations. However, the Communications Decency Act of 1996 (CDA) frees a neutral content carrier from any liability for online content (The specific notation on this Act is found in Title V of the Telecommunications Act of 1996), and while this Act is controversial in itself, it stands as law in courts across the country.

How can the "victim" embroiled in a Web blog attack fight back, then? One solution is to use a law entitled the Digital Millennium Copyright Act (DMCA - this link will take you to the UCLA site which helps to explain the law, but you can type the law into any search engine for a variety of explanatory choices). Lyons states this law is new, but - in reality - it's been in effect since 1998, created just two years after the CDA, and it requires Web hosts to eliminate material from their servers which infringes on copyrighted material that is used without permission. Accordingly, if business owners delve deeper into the CDA, they'll discover that the fallout from the blogs - inflammatory rudeness that includes nasty phone calls, etc. is covered by that Act and punishable by law.

But instead of fighting libel in court like a law-abiding citizen, Lyons quotes David Potts, a Toronto lawyer who writes on cyberlibel and who states that "filing a libel lawsuit, the way you would against a newspaper, is like using 18th-century battle filed tactics to counter guerrilla warfare. (pg 138)" In other words, while businesses resort to down-and-dirty counter-attacks against online defamation, you and I as investors now need to resort to self-preservation in the crossfire. How do we protect our investments?

The first step is to follow a portion of Lyons' advice, as he does provide a service for investors if you read his article closely. He suggests that business owners monitor the "blogosphere," so that they can catch blog smears early and quash them before they get out of hand. You and I can also watch for detrimental blogs, and one of the best ways to do this is to watch your investment news. There are two ways to do this: 1) Register at BuyandHold (free and no obligation) to take advantage of the personalized Stocktracker, which will alert you to any news about your investment interests, and; 2) Type your investment interest into any search engine at least once a week to preview any blogs that might have either a positive or negative interest in your investment concerns.

If you do find detrimental news about your interests, remember that a bit of "bad" news rarely affects long-term investment strategies. However, if you have cause for concern you have every right to contact your investment interest to investigate the accuracy of any report. When you do contact a business about unsettling news, you provide a service that Lyons doesn't mention. Investors can be the best watchdogs around, because they usually are as involved with their investments as the business owners.

On the other hand, be aware of news that's too good to be true, as Lyons suggests that a "blog swarm" is one way to counter-attack blog attacks. A blog swarm is created by companies who pay bloggers to plug their businesses and services, with the caveat that the blogger must disclose the fact that they are paid for their service. If you're familiar with "infomercials" then you know what to look out for when you read a honey-dipped review about some business or service online. In other words, keep your magnifying glass handy, because the disclosures may be hidden well out of plain site.

Lyons also suggests that business owners should "bash back" against bloggers who snack on a company's credibility. I hope that my investment interests don't sink that low. I hope that a letter to stockholders that explains the situation would suffice in an instance when the blogger can be easily discredited. Alternately, when a blogger is right - and in some instances he or she could find a weak link where others might not - then a company needs to own up to its failings. Not all bloggers are "toxic," and the investor has every right to learn about the good, the bad, and the ugly involved with their investments and to make a choice based on a discernment between "real" and "unreal."

Until Next Week,
Linda Goin